Property

Florida Key

Florida Key

Miami’s property market is as complex as the city itself

When Miami Vice burst onto televisions back in the mid-1980s, it was set in a version of Miami never seen before. Neon-lit, glamorous, oozing cash and art deco top to bottom, the cops and drug dealers series brought the city new life in the public mind. Like New Jersey of late, Miami and its property market are experiencing a bit of a renaissance. But where Jersey is saddled with the tandroids of Jersey Shore, Miami remains a major tourist destination, architectural hot spot, and home to more respectable pop culture like Burn Notice, CSI: Miami, Nip/Tuck and everyone’s favourite homicidal maniac, Dexter.

Miami may not be among the biggest cities in the United States but it is among its most vivid. The large Cuban diaspora and approximately 30 blocks with upwards of 1,000 art deco buildings — now restored hotels, apartments and swank dining establishments — have ensured that. Miami is also, “a dynamic market. Our buyers represent a diversified mix of primary and vacation home buyers, as well as investors,” according to Vanessa Grout, CEO of Douglas Elliman Florida, one of the state’s most active and farthest reaching property agencies.

The South Florida metropolitan area, where Miami is located, comprises districts with names familiar even to those who have never been there: Coral Gables, Coconut Grove, Little Havana, West Palm Beach and Miami Beach. Just down the road is the Florida Keys (you really should try its pie) and going the other direction is the original Disney World. Miami is home to a team from all four professional sports leagues — one of only 12 cities in the US that is — and dozens of international banks and cruise lines, not a shock considering the city’s proximity to the Caribbean. The Port of Miami is one of the busiest in North America and serves more passenger ships than any other in the world.

Miami’s office sector, often an indicator of property market health, is buoyant, and rivals American hotspots in Texas, Chicago and Seattle for office employment growth. Jones Lang LaSalle’s On Point office report for early 2011 sees the US economy making modest gains with business starting to gain confidence again. For the rest of 2011 and ’12, JLL’s report predicted, “Looking ahead, the West and the South are expected to lead employment gains over the next two years … due to positive migration and demographic trends to the sunbelt markets.” The thinking there is that, similar to Hong Kong, extra workers mean higher demands for homes and a trickle down boost for residential leasing and sales, not something Grout agrees with. Despite new jobs, Miami still posts an unemployment rate above the national average, and supply in the office sector outstrips demand at the moment.

According to a Douglas Elliman Florida report for the first quarter of 2011, the property market in the coastal communities is looking up. Condominium, townhouse and single-family home sales are up almost 30 percent over the same period a year earlier, which also marks a five-year high. “The report highlights significant trends indicating that within this realm of ocean front living, we are moving toward a healthier market,” explains Grout. But she’s quick to point out the element that is dragging the market down. “Our data shows 60 percent of the market is still distressed. While the non-distressed market is inherently stable (0.4 percent increase within the last year), overall price indicators continue to slide due to a rise in the distressed market share. As more distressed deals trade, overall average pricing drops. It is a shift in the mix.”

There has also been a shift in financing. Prices continue to slide but cash purchases accounted for over 65 percent of sales. As Grout sees it, that’s simply because financing is difficult to obtain in these days of banking responsibility. However, “For those deemed credit worthy, rates are extremely attractive right now. We may soon see this trend shift as banks are now beginning to lend with more ease,” she states.

A quick glance Elliman, or Sotheby’s International Realty or Engel and Volkers’ websites, as just a start, indicate the luxury market in the Miami is a substantial one; multi-million dollar homes are not uncommon, and they’re selling faster than in recent years. Average sale prices are over $1.2 million (down 8.3 percent) but volume is up — 4.3 percent over the previous quarter and 26 percent over 2010. So is now the time to make a purchase in the Miami area? “Even though price indicators may decline for some time, transaction volume has picked up tremendously,” theorises Grout. “The average number of days a property spends on the market is quickening, meaning once a property is priced correctly it will sell. However, Miami is still a long term investment rather than a flip.”